Ninth Circuit says Kalshi sports contracts are bets

A federal appeals court just turned Kalshi's sports business back into a state-gaming problem. On August 28 the Ninth Circuit ruled that the company's sports event contracts look like bets rather than swaps, so Nevada can keep enforcing its gaming laws against them, per the court's opinion in KalshiEX, LLC v. Assad. Read the scope before the headline. This is a ruling on a preliminary injunction, not a final judgment, not a nationwide ban, and not a CFTC rule, and it splits with a sister circuit.

Name the instrument

The three-judge panel affirmed in part the district court's order dissolving Kalshi's preliminary injunction and remanded in part. Judge Ryan Nelson wrote for the panel, with a concurrence from Judge Kenneth Lee. On the question that matters, the court held that Kalshi had not shown the Commodity Exchange Act likely preempts Nevada gaming law as applied to its sports event contracts, and it treated those contracts as bets, pointing to CFTC regulations that currently prohibit offering gaming-related contracts on prediction markets. The opinion quotes Kalshi describing its own product as "the first app for legal sports betting in all 50 states."

One line people will get wrong: this did not decide election markets. The panel sent Kalshi's election contracts back to the district court, so that piece is remanded, not resolved. The injunction stays dissolved only as to the sports contracts.

Where the money and the dispute sit

For Kalshi this is a fight over which rulebook, and which cost base, governs a fast-growing revenue line. Light-touch CFTC oversight of a federally licensed exchange is one regime; fifty states' gaming licensing, taxes and enforcement is a very different and more expensive one, and Nevada's Gaming Control Board, whose cease-and-desist Kalshi had blocked, is now free to press it. Judge Andrew Gordon dissolved that earlier injunction back in November 2025, and the Ninth Circuit has now largely backed him on sports.

The larger financial signal is the split. In April the Third Circuit went the other way, treating sports event contracts as swaps on a designated contract market, so two appeals courts now disagree on the same instrument, which is what typically pulls a case toward the Supreme Court, as the National Law Review laid out. Kalshi is not conceding. Spokesperson Dani Lever told Bloomberg Law that the Ninth Circuit still agreed federal law prevents states from regulating trading on a federally licensed exchange, and that the company "will be seeking further review." Commentators have named the Supreme Court as the likely resolver, but no one has granted review yet, so price that as an expectation, not a done deal.

The takeaway

If you trade around prediction-market exposure, do not book this as "Kalshi banned" or "prediction markets illegal." Book it as a live circuit split that raises the odds of a Supreme Court fight and, in the meantime, lets Nevada meter Kalshi's sports contracts under state gaming rules while its election contracts sit unresolved on remand. Watch two clocks: whether Kalshi's further-review push becomes an actual cert petition, and whether other states with pending actions start citing the Ninth Circuit. Until one of those moves, treat the bets-versus-swaps question as open, not closed.

For related context, see our coverage of the NY Fed on stablecoins and the Mundell-Fleming trilemma, Treasury's GENIUS Act stablecoin rules, and the BitGo and NYDIG trading-arm deal.